Cracking the organizational code for growth Chemicals ......reckitt benckiser group plc recticel reliance industries ltd repsol sa rockwood holdings inc schulman (a.) inc scotts miracle-gro

© OLIVER WYMAN

Cracking the organizational code for growth

Chemicals & Materials growth analysis

January 2013

1 1 © OLIVER WYMAN

Contents

1) Key organizational challenges in the industry 2

2) Growth performance of key players 4

3) How Industry players are exploiting organizational levers 13

4) Why participate in Oliver Wyman’s study? 17

Page

2

Key organizational challenges in the industry

Section 1

3 3 © OLIVER WYMAN

Looking at growth in the chemicals and materials industry

• While strategic issues impacting this sector have been analysed at length, designing and

implementing the right organization remains the key lever to both enable and achieve

sustainable growth.

• Major multinationals need to overcome the organizational challenges associated with:

- Migrating from being a product - to solution - and service-provider

- Achieving the right power and resource distribution between business lines, regions, and

the corporate center

- Designing alternative organizational models to address new growth opportunities

- Putting in place the right organizational and management models in emerging countries

- Implementing customer-oriented processes

- Tailoring customer-interaction models and channels

- Developing a growth-nurturing culture

- Preparing for the future while delivering short-term results

• Oliver Wyman is currently launching a study to further understand, qualify, and quantify the

required organizational levers and how they impact the long-term sustainable growth

prospects within the chemicals and materials industries.

• The following pages provide a preliminary view of recent growth results within the sector,

based on publicly available information, in order to showcase the importance of identifying the

organizational levers that propelled star performers’ growth trajectories.

4

Growth performance of the key players

Section 2

5 5 © OLIVER WYMAN

85% 15%

2012 market influence of the top ten players (vs. Top 100)

Top ten global players in the chemicals industry (2012 B$)

Top sector players The industry remains extremely fragmented

95.2

65.7

64.7

59.9

51.3

50.6

46.9

38.7

37.9

27.5

Note:

Chemical activity only

Categorization by revenue is relative to the overall top 100 sample Source : ICIS Chemical Business

/w/index.php?title=Datei:Mitsubishi_Chemical_Logo.svg&page=1&filetimestamp=20070406172739

6 6 © OLIVER WYMAN

What was the impact of the 2008 economic crisis on the industry? While 55% managed double-digit growth pre-crisis, a full 76% reached this goal after crisis despite the recession

Catching-up

34% of companies

Anemic

10% of companies

AGRIUM INC

AIR LIQUIDE SA AIRGAS INC

AKZO NOBEL ASAHI KASEI CORP

AVERY DENNISON CORP

BASF SE

BRASKEM SA-PREF A

CF INDUSTRIES HOLDINGS INC

CHEVRON CORP DU PONT (E.I.) DE NEMOURS

EASTMAN CHEMICAL CO

EMPRESAS COPEC SA

EXXON MOBIL CORP

FORMOSA CHEMICALS & FIBRE

FORMOSA PLASTICS CORP

GEORGIA GULF CORP

HUNTSMAN CORP

JOHNSON MATTHEY PLC

KEMIRA OYJ

LAFARGE SA

LINDE AG

MITSUBISHI CHEMICAL HOLDINGS

MONSANTO CO

MOSAIC CO/THE

NOVO NORDISK A/S-B

POTASH CORP OF SASKATCHEWAN

PRAXAIR INC

RELIANCE INDUSTRIES LTD

RPM INTERNATIONAL INC

SASOL LTD

SAUDI IND INVESTMENT GROUP

SCOTTS MIRACLE-GRO CO-CL A

SIKA AG-BR

SOLVAY SA

YULE CATTO & COMPANY PLC

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-30% -20% -10% 0% 10% 20% 30% 40% 50% 60%

Significant double-digit growth is necessary just to keep pace within the industry.

Revenue Growth (CAGR 2005-2007)

Rev

en

ue G

row

th (

CA

GR

2009

-2011)

Note:

Origins of each axis set to 10% to differentiate

double-digit growth

Superstars

42% of companies

Stalling

13% of companies

Decelerating Growth

Accelerating Growth

Source : Bloomberg, Oliver Wyman proprietary analysis

7 7 © OLIVER WYMAN

What are the growth trends in the industry? With a few exceptions, revenue growth after the recession has outpaced growth prior to the recession


-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 11 21 31 41 51 61 71 81 91

Rev

en

ue C

AG

R

Company Rank

2005-2007

2009-2011

8 8 © OLIVER WYMAN

AGRIUM INC

AIR LIQUIDE SA

AIRGAS INC

ARKEMA

ASAHI KASEI CORP

AVERY DENNISON CORP

BASF SE BP PLC

BRASKEM SA-PREF A CHEVRON CORP

CLARIANT AG-REG

COOKSON GROUP PLC

DOW CHEMICAL CO/THE

DU PONT (E.I.) DE NEMOURS

EASTMAN CHEMICAL CO

EXXON MOBIL CORP FORMOSA PLASTICS CORP

INDUSTRIES QATAR

IRPC PCL

JOHNSON MATTHEY PLC

KEMIRA OYJ

LAFARGE SA

MEXICHEM SAB DE CV-*

MITSUBISHI GAS CHEMICAL CO

MONSANTO CO


PPG INDUSTRIES INC

RECTICEL


SAUDI BASIC INDUSTRIES CORP


SCHULMAN (A.) INC


SIKA AG-BR

SOLVAY SA

TESSENDERLO CHEMIE

WESTLAKE CHEMICAL CORP

WR GRACE & CO

YARA INTERNATIONAL ASA

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

-10% 0% 10% 20% 30% 40% 50% 60%

Should growth or efficiency be pursued? 66% of firms that beat average EBITDA did so by pursuing a growth vs. efficiency play

Revenue Growth (CAGR 2009-2011)

EB

ITD

A G

row

th (

CA

GR

2009

-2011)

Note:

Categorization by revenue and EBITDA quadrant is relative to the

overall sample

Highly profitable growth

27% of companies

Efficiency play

10% of companies

Falling behind

48% of companies

Less or unprofitable growth

15% of companies


9 9 © OLIVER WYMAN

Market cap and growth are highly correlated Companies that showed highly profitable growth outperformed the market cap growth of their competitors


Unprofitable growth is sanctioned by the market

4.2%

-7.6%

12.1% 11.4%

-20.0%

0.0%

20.0%

Falling behind Less or unprofitable growth Highly profitable growth Efficiency play

Mark

et

Cap

CA

GR

(2

0009

-2011)

10 10 © OLIVER WYMAN

AGRIUM INC

AIR LIQUIDE SA AIR PRODUCTS & CHEMICALS INC

AKZO NOBEL

ALBEMARLE CORP

ARKEMA

ASAHI KASEI CORP

AVERY DENNISON CORP

BASF SE

CABOT CORP

CELANESE CORP-SERIES A

CEMENTOS PORTLANDVALDERRIVAS


CLARIANT AG-REG COOKSON GROUP PLC

CRODA INTERNATIONAL PLC

DENKI KAGAKU KOGYO K K

DIC CORP DOW CHEMICAL CO/THE


EASTMAN CHEMICAL CO

EMS-CHEMIE HOLDING AG-REG

FERRO CORP

FMC CORP



GIVAUDAN-REG

HANWHA CHEMICAL CORP

HUNTSMAN CORP

INTL FLAVORS & FRAGRANCES

ISRAEL CHEMICALS LTD

JOHNSON MATTHEY PLC

JSR CORP

KANEKA CORP

KURARAY CO LTD

LA SEDA DE BARCELONA

LAFARGE SA

LG CHEM LTD

LINDE AG LONZA GROUP AG-REG MEXICHEM SAB DE CV-*


MITSUI CHEMICALS INC

MONSANTO CO

MOSAIC CO/THE

NIPPON SHOKUBAI CO LTD

NOVO NORDISK A/S-B

NOVOZYMES A/S-B SHARES

POLYONE CORPORATION


PPG INDUSTRIES INC

PRAXAIR INC

RECKITT BENCKISER GROUP PLC

RECTICEL

RELIANCE INDUSTRIES LTD REPSOL SA

ROCKWOOD HOLDINGS INC

SCHULMAN (A.) INC


SGL CARBON SE

SHIN-ETSU CHEMICAL CO LTD

SHOWA DENKO K K

SIGMA-ALDRICH

SIKA AG-BR

SOLVAY SA

STEPAN CO

SUMITOMO CHEMICAL CO LTD

SYMRISE AG

SYNGENTA AG-REG

TAIYO NIPPON SANSO CORP

TESSENDERLO CHEMIE

TISZA CHEMICAL GROUP PLC

TORAY INDUSTRIES INC

ULTRAPAR PARTICIPACOES SA

VALHI INC

WACKER CHEMIE AG


WR GRACE & CO YARA INTERNATIONAL ASA


0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

500 5000 50000 500000

EB

ITD

A M

arg

in (

2009

-2011)

Average Revenue (2009-2011)

Does company size impact EBITDA growth? Smaller companies showed ability to grow EBITDA at a higher rate, although average growth rate was consistent irrespective of size



AGRIUM INC

AIR LIQUIDE SA

AIR PRODUCTS & CHEMICALS INC

AIRGAS INC

ALBEMARLE CORP

ARKEMA

AVERY DENNISON CORP

BASF SE

BRASKEM SA-PREF A

CABOT CORP

CEMENTOS PORTLANDVALDERRIVAS


COOKSON GROUP PLC

CYTEC INDUSTRIES INC

DIC CORP

DOW CHEMICAL CO/THE


EASTMAN CHEMICAL CO

EMPRESAS COPEC SA


FERRO CORP


GEORGIA GULF CORP

HANWHA CHEMICAL CORP

HUNTSMAN CORP

ISRAEL CHEMICALS LTD JOHNSON MATTHEY PLC


LAFARGE SA

MEXICHEM SAB DE CV-*


MITSUBISHI GAS CHEMICAL CO MITSUI CHEMICALS INC

MONSANTO CO

NOVO NORDISK A/S-B

POLSKI KONCERN NAFTOWY ORLEN


PRAXAIR INC

RECTICEL


REPSOL SA

SASOL LTD




SHERWIN-WILLIAMS CO/THE

SIGMA-ALDRICH

SOLVAY SA STEPAN CO


TOSOH CORP


VALHI INC


-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

500 5000 50000 500000

Does company size influence revenue growth ? The largest companies were able to achieve higher average revenue growth

Average Annual Revenue in M USD (2009 – 2011)

Rev

en

ue G

row

th (

CA

GR

2009 –

2011)



Does revenue growth influence EBITDA? Higher sales revenues growth often comes at the expense of EBITDA

AGRIUM INC

AIR LIQUIDE SA AIR PRODUCTS & CHEMICALS INC

AIRGAS INC

AKZO NOBEL

ALBEMARLE CORP

ARKEMA

ASAHI KASEI CORP

AVERY DENNISON CORP

BASF SE

BRASKEM SA-PREF A

CABOT CORP


CHEVRON CORP

COOKSON GROUP PLC

CRODA INTERNATIONAL PLC

CYTEC INDUSTRIES INC

DIC CORP

DOW CHEMICAL CO/THE


EASTMAN CHEMICAL CO

EMPRESAS COPEC SA


FERRO CORP

FMC CORP



GEORGIA GULF CORP

GIVAUDAN-REG

HUNTSMAN CORP

INDUSTRIES QATAR

INTL FLAVORS & FRAGRANCES

ISRAEL CHEMICALS LTD

JOHNSON MATTHEY PLC

JSR CORP

KANEKA CORP

KEMIRA OYJ

KURARAY CO LTD


LAFARGE SA

LG CHEM LTD

LONZA GROUP AG-REG MEXICHEM SAB DE CV-*


MITSUI CHEMICALS INC

MONSANTO CO MOSAIC CO/THE

NEWMARKET CORP

NOVO NORDISK A/S-B

NOVOZYMES A/S-B SHARES

POLSKI KONCERN NAFTOWY ORLEN

POLYONE CORPORATION


PPG INDUSTRIES INC

PRAXAIR INC

RECKITT BENCKISER GROUP PLC

RECTICEL

RELIANCE INDUSTRIES LTD REPSOL SA

ROCKWOOD HOLDINGS INC

RPM INTERNATIONAL INC

SASOL LTD



SCHULMAN (A.) INC

SCOTTS MIRACLE-GRO CO

SGL CARBON SE

SHERWIN-WILLIAMS CO/THE

SHIN-ETSU CHEMICAL CO LTD

SIGMA-ALDRICH

SIKA AG-BR

SOLVAY SA

SUMITOMO CHEMICAL CO LTD

SYMRISE AG

SYNGENTA AG-REG

TAIYO NIPPON SANSO CORP

TESSENDERLO CHEMIE



VALHI INC VALSPAR CORP

WACKER CHEMIE AG


WR GRACE & CO YARA INTERNATIONAL ASA


0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

-20% -10% 0% 10% 20% 30% 40% 50% 60%

EB

ITD

A M

arg

in (

2009

-2011)

Sales Revenue CAGR (2009-2011)


13

How industry players are exploiting

organizational levers

Section 3


THE DOW CHEMICAL COMPANY

KEY ORGANIZATIONAL ATTRIBUTES (con’t)

ORGANIZATION

Move to a Global Business Unit model & Empower GBU Presidents

GBU grouped by customer segments / business models with oversight from

EC members

One president in each key regional area

Dow’s Corporate Centre will be responsible for meeting GBU needs

Creation of a vice president of Strategic Development and Planning position.

INNOVATION

Focusing on unique, innovative, high-margin products (i.e. solar shingles)

Dow Commits $25 Million per year to advance research in leading universities

Leveraged innovation capabilities to improve operational and overhead

efficiencies

TRANSFORMATION

Adaptation of the organization every 2 to 3 years

Reduce costs, to be more responsive on capturing opportunities

Turn resources toward the customers and markets

Less structure at the top of the Company with more deployment and

implementation in the market

Become a more agile, flexible and customer-focused company

Support its global strategy: strong Investments in the Middle East

KEY ORGANIZATIONAL ATTRIBUTES

STRATEGY

Target to triple cash flows between 2012 (1.25B$) and 2015 (2-3B$)

EBITDA growth to come from margin growth, ethylene cycle and

innovation

VALUES

Sustainability is the centerpiece of DOW’s product development and

partnerships around the world

TALENT & REWARDS

Hire and reward systems changed to foster innovation

ACQUISITIONS

Strong use of joint ventures in Middle East and Asia

COMPANY AT A GLANCE

• Sales 2011: $60 billion

• 52,000 people worldwide

• 197 sites

• Worldwide presence in 36 countries

• Revenue CAGR (2009-2011): ~15%.

Source : Public information , annual report


BASF


ORGANIZATION

5 business segments with 14 divisions – 70 Global & Regional BUs

Division bears operational accountability

Regional division ensures financial reporting and optimize infrastructure

Executive team double hatted on regional and functional role

TALENT

Competencies adapted by business and customer interaction model

Best team strategy: excellent people, excellent place to work, and excellent

leaders

INNOVATION AND R&D

Global technology platforms combined with decentralized development units

VALUES

Creative, Open, Responsible, Entrepreneurial

TRANSFORMATION

Latest update of the organization structure in November 2012

Realignment of product groups in Chemicals segment to enhance operational

and technology excellence

New division performance materials in the functional materials & solutions

COMPANY AT A GLANCE

• Sales 2011: $73.5 billion


• 370 production sites

• Worldwide presence in 80 countries

• Revenue CAGR (2009-2011): ~20%



PURPOSE

We create chemistry for a sustainable future

STRATEGY

One is greater than the sum of the parts: we add value as one

company

Long term growth prevails on short term results

Move from commodities to specialties to functionalities

ACQUISITONS

Acquisition to support key capabilities (i.e. Becker to bolster crop

protection), innovation driven, reducing cyclicality, strict financial

criteria (ROI > 8%)

15 B$ of acquisitions and 10 B$ of divestments over the last 10 years


BRASKEM COMPANY AT A GLANCE

• Sales 2011: $23.8 billion


• 36 industrial units

• Worldwide presence in 60 countries.

• Revenue CAGR (2009-2011): ~55%



ORGANIZATION

3 business units (Polymers, Basic Petro Chemicals, International BD)

2 technology and innovation centers

EC composed of 11 members (Units and functions)

TALENT

CEO and former CEO were both homegrown

Objective to develop entrepreneur profiles and attract international talent to

support international growth

INNOVATION AND R&D

Focus on meeting client needs to add quality to the end products

Bolstered by open innovation, working through partnerships. Numerous

partnerships with research centers, scientific community and universities

12% of revenues over the last three years coming from innovations developed

in the period

CULTURE AND VALUES

Culture based on Odebrecht’s values: client satisfaction, responsible

operation, confidence in people, people self development, decentralized

operations, reinvestments of results, returns for stakeholders and investors

TRANSFORMATION

Operational excellence program in partnership with SAP, standardize

business processes, simplify application map, create management platform to

support growth


PURPOSE / VISION

Be the world leader in sustainable chemistry, innovating to better serve

people

STRATEGY

Maximizing growth while improving efficiency

Provide high qualified service based on the premise of responsible and

active operations in line with sustainable development

Industrial base in Latin America to enjoy access to raw materials and

competitive conditions

ACQUISITONS

Acquisition of Quattor to increase the scale and diversify feedstock

Acquisition of Sunoco Chemicals to increase US footprint

Acquisition of Dow poly propylene – footprint in US and Germany

Currently capturing the synergies resulting from both integrations

17

Why participate in Oliver Wyman’s study?

Section 4


Why participate in Oliver Wyman’s study? To understand the organizational drivers behind the variations in growth results - looking beyond the typical strategic contributors

• The most comprehensive study in

the sector on the subject

• High caliber of global corporations

participating within your industry

• Privileged access to insights on the

key trends to face industry

challenges

• Customized report highlighting how

your company’s measures against

best practices

• Flexible approach to optimize your

involvement (a short interview or

online questionnaire)

• Complimentary participation

Reasons for participating

For more info, or to register for

participation, please contact us at

[email protected]

1. Key Industry Trends

• A comprehensive view of key trends and their impact on the

industry

• Perspectives on how these trends have had an impact on growth

within the industry

• Conclusions as to what has contributed to the success of the

“Superstars” and those companies achieving highly profitable

growth

2. Customized analysis: how Company X measures up

against the industry

• A detailed comparison of Company X against each of the

identified organizational levers and best practices

• Comparison to peers with respect to the application of the levers

and best practices and the resulting growth success

3. Key highlights and best practices

• A summary perspective of Company X relative to the industry and

our best practices analysis

4. Backup

• Flat report with answers from Company X

Cracking the Organizational Code for Growth: Feedback Report - Company X

mailto:[email protected]

CONFIDENTIALITY

Our clients’ industries are extremely competitive. The confidentiality of companies' plans and data is obviously critical. will

protect the confidentiality of all such client information.

Similarly, management consulting is a competitive business. We view our approaches and insights as proprietary and therefore

look to our clients to protect 's interests in our presentations, methodologies and analytical techniques. Under no circumstances

should this material be shared with any third party without the written consent of .

Copyright ©

Documents

Cracking the organizational code for growth Chemicals ......reckitt benckiser group plc recticel reliance industries ltd repsol sa rockwood holdings inc schulman (a.) inc scotts miracle-gro